The Wall Street Journal on the Geopolitics of the AIIB

Last night I had the opportunity to chat with the Wall Street Journal’s (WSJ) China Bureau Chief, Jonathan Cheng, about some of the geopolitics surrounding the Asian Infrastructure Investment Bank (AIIB).

One of the fascinating things about multilateral development banks is that they simultaneously enable cooperation between competing powers while also advancing the strategic interests of shareholders (and particularly their leading shareholders). For the AIIB, it is China’s interests that are foremost advanced, yet this has not deterred many other states from engaging – including India, the UK and Australia. Indeed, China’s rival power India is both the AIIB’s second-largest shareholder and its largest recipient of funding. Jonathan captures these, and other, complexities well.

WSJ is a paid-subscriber service, but those with subscriptions can access the full article here: China-Backed Infrastructure Bank Seeks to Win Over Countries With Western-Style Approach

For those without subscriptions, I offer a few key sections of the article below. For a longer analysis of these ideas, you can also read a recent chapter of mine here: Rethinking Multilateralism in Foreign Aid Beyond the Neoliberal Hegemony

Since it was established five years ago with 56 members, the bank has grown to 103 approved members, including all of the Group of Seven industrialized nations, minus the U.S. and Japan.

The bank’s headquarters are in Beijing and the president is a former Chinese deputy finance minister who was re-elected to the AIIB’s helm this week after running unopposed. China’s 26.6% stake makes it the lender’s largest shareholder, with an effective veto over any major decisions, which requires a 75% supermajority.

Kearrin Sims, a development-studies scholar at James Cook University in Cairns, Australia, said that

while the AIIB boosts China’s own political ambitions, the bank “also enables cooperation between competing powers.”

Dr. Sims notes that India, a geopolitical rival of China whose 7.6% stake makes it the AIIB’s second-largest shareholder, has been among the largest recipients of the bank’s lending in recent years.

“Given the hypernationalism that Xi Jinping has cultivated over the past five to 10 years, I don’t think China could easily lend to India, even if there are benefits for them to do it,” he said. “But you can do it through the AIIB.”